JAKARTA (Reuters) -The role of the Indonesia’s central bank must be strengthened to help support the government’s economic growth target of 8% by 2029, a lawmaker heading a parliamentary committee overseeing the financial sector said on Friday.
Mukhamad Misbakhun said the commission has been preparing measures on how parliament could help the government to achieve its 8% target from the current 5%, including strengthening the roles of the finance ministry as well as Bank Indonesia.
“If our economic growth is driven by two engines of fiscal and monetary policy, this will be a strong national combination going forward,” he said at a capital markets forum in Jakarta.
Misbakhun did not elaborate on how the central bank’s role could be enhanced and no decision has been taken to date. He said discussions were still ongoing and said he had met BI officials the previous night.
“We want that even though BI is an independent institution, but it’s independent in the process, but not independent in our purpose of statehood,” the lawmaker added.
Indonesia’s economic growth has hovered at around 5% in the past few years.
Parliament is discussing a revision of the 2023 Development and Strengthening of the Financial Sector Law, after the Constitutional Court ordered lawmakers earlier this year to review it on matters related to the independence of the state deposit insurer agency.
There have been concerns, however, that lawmakers might also reevaluate the central bank’s role. Its Governor Perry Warjiyo has acknowledged there had been talks about the central bank’s mandate in those parliamentary discussions, but no changes were expected.
BI’s mandate is currently supporting sustainable economic growth along with maintaining the stability of the rupiah currency and prices.
Indonesian financial markets fell sharply earlier this week, pressured by concerns over the government’s fiscal strategy and growth prospects.
(Reporting by Stefanno Sulaiman; Editing by Martin Petty and Kim Coghill)
